Roofers, Banks and Home Security Companies Join the Solar Race

June 2, 2014 MODsolar Admin

One of the really exciting trends in solar right now is that many new and diverse industries are taking a hard look at entering the US solar market. At ModSolar we are in a unique position to watch this trend, by taking a look at the types of companies using our software platform and how that is changing.

What we are seeing is that companies involved in home improvements such as roofers and alarm systems are increasingly interested. We get calls from alarm companies all the time. Why might this be? And how will this affect us?

In the solar industry, one of the main challenges we face is very high customer acquisition costs. Although the lifetime value of a solar customer works out at 40, 50 or even 60 thousand dollars, the cost to originally acquire that customer can be upwards of 5000 dollars.

What we are noticing, is that the companies looking at solar are companies that know how to acquire a large number of customers very cheaply. If you can work out how to acquire a solar customer for 500 or even 1000 dollars, you are still getting all the lifetime benefits, but your profit margin has radically increased.

Roofing companies for example, are in a position to find customers very cheaply, within a well-established network. For a roofer, the interesting thing about solar is that some people don’t qualify for solar because they need to get their roof replaced first. A roofing company might make 7 to 10 thousand dollars on a roof, but if they can sell and install a solar array at the same time? It’s really not difficult to see why they want to get into the race.

In addition to roofing and alarm companies, we have seen home renovation and automation companies, communications companies and even mortgage companies becoming interested in entering the US Solar market. When you think about it, if anyone knows how to sell a complex financial product over the phone, it’s a mortgage company.

Ultimately, this trend is going to push the expansion of residential solar and really drive the race to get solar power into as many homes as possible. There are downsides. A roofer or architect might be excellent at interacting with homeowners and have the ability to install the system itself; but they may not be able to advise you on the financial aspects of the sale. Equally, your accountant will be able to advise you on the financial side but you don’t want him anywhere near your roof with a hammer.

It’s an interesting dichotomy. And we have seen some companies try to partner up, splitting the complex financial sale from the actual work. What they have found is that this does not represent enough of their business to make it interesting or worthwhile. The key point here is that if your business is too far away from solar, it might not make sense to invest in diversification. You wouldn’t question why an alarm company would want to sell you a solar system- these are already people who come to your house and do construction. But is your CPA really going to be interested in that? That seems a little far-fetched.

Over the next decade, we will be able to see how all of these issues shake out. In my mind, the most interesting one to watch will be the communications companies, your Horizons and ATT’s of the world. Then of course there’s Google. Google is an interesting specific case because when they acquired Nest, they acquired a portal into your home. It will be very interesting to see how they use that anchor to expand. There’s probably nothing they can’t figure out and don’t have the money to try.

There is no doubt that the big losers will be the utility companies. Over the next ten years, when all of these varied industries involve themselves in selling solar, companies that currently provide centralised generation will be in big trouble. Already in Australia the utility companies are the biggest solar providers in the whole country. They have worked out that even though they may be providing centrally generated energy today, tomorrow they may need to be selling distributed generation. Let’s hope the US follows suit!

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